Energy Community for South East Europe: Rationale Behind and Implementation to Date

The European Commission and the Stability Pact have launched the Athens Process in 2002 and the Energy Community Treaty, with the objective of creating a regional energy market in SEE, was signed in 2005. The purpose of this paper is to give an overview of the national but also reforms at regional level in the electricity systems in SEE, but also to underline the open questions with regard to the areas in which reforms are not complete and progress is still needed. The focus of the paper will be put on the implementation of the Energy Community Treaty covering its most relevant aspects. It does not aim however, to provide a detailed comparative analysis of the electricity systems in all nine countries from SEE, neither to study one specific issue. Therefore, real conclusions will not be drawn at the end, but rather questions for further research will be left open. After the introduction of the development of European energy policy and the requirements for liberalization of the electricity markets in the Member States, a presentation of the Athens Process and the Energy Community as an example of a regional energy market will be done. In addition an explanation of the rationale behind the Energy Community will be provided. Afterwards, the progress made and the obstacles that still exist on the way to establishment of the SEE regional energy market are going to be presented, through the way of implementation of the electricity acquis

Liberalization of Electricity Markets and Public Service Obligations in the Energy Community

This book presents the first in-depth analysis of the export of the EU electricity acquits, through the imposition of an EU-type regional electricity market (REM) in SEE within the enlargement process. Among other germane issues, the author discusses the following: the suitability of the European model of electricity markets' liberalization for economies in transition;the use of the Public Services Obligations (PSO) to address the impact of electricity markets liberalization; the use of regulated prices and measures for granting priority rights for cross-border capacity allocation as PSOs; the Court of Justice judgment in Federutility on the sustainability of states' protection of their different types of customers, including the large businesses; the Energy Community as a step towards a Pan-European Energy Community; the effect of simultaneous national electricity markets liberalization and cross-border regional integration of national electricity markets; and the interplay between liberalization policy and reforms and the regulatory tools available to address their impact on provision of public services. The author's proposed rethinking of the public services obligation offers new views on using this tool more effectively and proposes possibilities for its practical implementation through measures such as energy efficiency, allocation of interconnectors' capacity, transparency, addressing the affordability issue and the protection of vulnerable customers. The book is remarkable for its clear analysis of the policy lessons arising from the export of the idea of liberalized energy markets, and will be welcomed by practitioners, officials, academics and others in energy law and policy for its informative and forward-looking overview of the national and cross-border reforms in the Energy Community framework.-- Figures. -- List of Tables. -- List of Abbreviations. -- Preface. -- Acknowledgements. -- Introduction. -- Part I The Framework. -- Chapter 1 From a Textbook Model to an Incrementally Developing European Model for the Liberalization of Electricity Markets. -- Chapter 2 PSO as a Regulatory Tool to Tackle the Impact of Electricity Market Liberalization. -- Chapter 3 The Power of the Commission in Implementing the Incrementally Developed European Model of Electricity Market Liberalization in Third Countries. -- Part II Analysis of Electricity Market Liberalization in SEE. -- Chapter 4 Implementation of the Incrementally Developed European Model of Electricity Market Liberalization in Third Countries. -- Chapter 5 Rethinking Liberalization through an Analysis of PSO: Is PSO a Useful Tool to Tackle the Impact of Electricity Market Liberalization in the Contracting Parties?. -- Conclusion. -- Appendices. -- Annex I: Market Participants in the Electricity Markets of the Contracting Parties. -- Annex II: Energy Consumption and Supply, and Installed Capacity to Meet Electricity Demand in the Contracting Parties. -- Bibliography. -- Table of Statutes. -- Table of Cases. -- Energy Community Documents.Published version of EUI PhD thesis, 201

Liberalisation of the Electricity Markets and the Public Service Obligation in the Energy Community

Defense Date: 11/04/2011 Examining Board: Prof. Hans-W. Micklitz, European University Institute Prof. Marise Cremona, European University Institute Prof. Leigh Hancher, University of Tilburg Dr. Dirk Buschle, Energy Community SecretariatThe focus of the thesis is the liberalisation of the electricity markets in South East Europe (SEE) and the establishment of the Energy Community in 2005 between the European Union and the countries from the SEE. It analyses the export of the EU electricity acquis within the enlargement process, and the establishment of a regional electricity market in SEE. Following a deductive approach, the starting point is the suitability of the European model of electricity markets’ liberalisation for the SEE countries. These are economies in transition, characterized by different economic needs in comparison to the EU Member States which negotiated the electricity acquis currently in place. Particular emphasis is placed on the use of the Public Services Obligations (PSO) by the SEE countries in order to address the impact of this liberalisation. The existing literature on the Energy Community Treaty and on the implementation of specific PSOs in the electricity industry is quite scarce. The findings of this thesis confirm the working hypothesis that the EU progressively recognizes that the liberalisation of the former public services cannot be achieved without two basic elements which so far have been largely neglected: a) a strong social policy enshrined in the universal services doctrine and b) safeguard measures to guarantee security of supply. This is reflected even more strongly in the liberalisation of the Contracting Parties' electricity markets. The policy lessons elaborated in the conclusions aim at providing a contribution to the broader discussion on the export of the EU electricity acquis to the SEE and ENP countries. This thesis proposes a re-thinking of the PSO notification system currently in place for Member States by granting a veto power to the Commission in case the PSO notified is not in line with the electricity acquis. It also proposes the introduction of a notification requirement for the Contracting Parties. By analysing the regulated prices and the measures for granting priority rights for cross-border capacity allocation as PSO, it has been found that the electricity acquis does not prohibit per se their implementation. It identified the conditions under which these measures could be used only as a temporary regulatory tool. The thesis proposed alternative measures for the protection of vulnerable customers, such as energy efficiency and demand-management solutions and an increase in transparency as to the allocation of interconnectors’ capacity

Rationale behind the Establishment of the Energy Community

This paper deals with the Energy Community established between the countries from SEE and the European Union. It serves as an example of the extension of the energy acquis to the countries from SEE, before the later become full members of the EU. In particular, the paper analyses the rationale that stands behind the establishment of the Energy Community. It will show that, unlike the reforms undertaken in Central and Easter Europe which were focused on economic reforms, the countries from SEE had to go through a process of recovery from the political conflicts and wars that took place in the 1990s. Therefore, not the market reforms including the energy liberalisation and democratic governance, but conflict prevention and reforms for establishing the stability and restructuring of the physical infrastructure took place in the last decade in the SEE. This paper will argue that there are strong driving forces on both sides which led to development of the idea for establishing a regional electricity market in SEE and now keep forcing the implementation of the EnCT in practice. The Energy Community, on the one hand, contributes to the three main objectives of the EU’s energy policy has: competitiveness, security of supply and sustainability. On the other hand, the membership perspective of the SEE countries is the main motivation and stimulated their involvement in the whole project

Regional Electricity Markets in Europe: Focus on the energy community

Regional electricity markets (REM) are a natural step towards the creation of a single European electricity market. There are seven Electricity Regional Initiatives (ERI) launched by European Regulators Group for Electricity and Gas (ERGEG). This paper brings the focus to the eight REM covering the South East European (SEE) countries initiated by the European Commission. The congestion management and capacity allocation are used as an example to show that the SEE REM deals with the same priority issues as the other REMs do, and that the progress of this eight REM is great despite the short time of its existence. Given the EU membership perspective of the SEE countries and the expectation that the SEE REM shall become part of the internal electricity market, as well as the overlap between some members of the SEE REM and the other ERGEG ERI, the work of both initiatives shall be organized in a manner that uses the best practices and experience gained in each of them

Regional electricity markets in Europe: Focus on the Energy Community

Regional electricity markets (REM) are a natural step towards the creation of a single European electricity market. There are seven Electricity Regional Initiatives (ERI) launched by European Regulators Group for Electricity and Gas (ERGEG). This paper brings the focus to the eight REM covering the South East European (SEE) countries initiated by the European Commission. The congestion management and capacity allocation are used as an example to show that the SEE REM deals with the same priority issues as the other REMs do, and that the progress of this eight REM is great despite the short time of its existence. Given the EU membership perspective of the SEE countries and the expectation that the SEE REM shall become part of the internal electricity market, as well as the overlap between some members of the SEE REM and the other ERGEG ERI, the work of both initiatives shall be organized in a manner that uses the best practices and experience gained in each of them.Regional electricity Market Electricity regional initiatives South East Europe Congestion management

The Energy Community: Regional Ownership of an Integration Initiative in South East Europe

This paper focuses on the process of establishment of a new Regional Electricity Market in South East Europe. This is an example of an intra-regional cooperation between the countries from the Western Balkans. In addition, the differences between this regional energy market and other Electricity Regional Initiatives in Europe up to date will be underlined, having in mind that the ultimate objective is that SEE REM shall be integrated into the internal energy market of the EU. So far, the regional initiatives covering the SEE countries in other fields have been characterized with a limited success due to the fact that most of these regional initiatives were initiated by external actors and a genuine will for cooperation between the SEE countries was missing in cases when an external incentive was lacking behind. Nevertheless, as it could be incurred from the existing successful REMs in other parts of Europe, the political will and dedication of the market players is essential for an effective integration of the national electricity markets. Even though the SEE REM was initiated as an idea of the EU and the Stability Pact, the development of the SEE REM in the framework of the Energy Community has been impressive in the short period of its existence. Despite the many remaining open issues before its effective functioning and integration with the other REMs in Europe, many steps and great reforms have been undertaken in electricity markets of the SEE countries at national but also at cross-border level. The clear enlargement perspective of the countries involved was the main incentive for reforms of the national electricity markets in SEE and for the establishment of the Energy Community. Therefore, this regional initiative is being transformed into regional cooperation seen more as an 'open regionalism' achieved from within the region and with regionally owned institutions and solutions for solving the regional problems. That is where the positive expectations for a success of the regional initiative between the SEE countries in the energy field, come from and that is why this article argues that the Energy Community is a positive example of a regional initiative for the SEE countries.Product of workshop no. 16 at the 11th MRM 201

The Energy Acquis under the Energy Community Treaty and the Integration of South East European Electricity Markets: An Uneasy Relationship?

For the past three decades, the attainment of an internal energy market has been at the centre stage of European Energy Policy. The recent adoption of the Third Energy Package is a further demonstration of this course of action. The growing need for Europe to tackle a number of concerns be they related to energy security or environmental protection form the rationale behind this pursuit. Today, if EU energy policy is first founded on the effective realization of an internal energy market, it also becomes increasingly visible that the EU cannot simply rely on this approach. In order to deal with the imperatives of a coherent energy policy, the elaboration of an external energy policy is regarded as a sine qua non at the institutional level. The recent Second Strategic Energy Review and the Energy Security and Solidarity Action plan it contains emphasizes the importance of a greater focus on the EU’s energy international relations. Amongst the initiatives established in regard of such a process, the Treaty establishing the Energy Community for South East Europe (Energy Community Treaty - EnCT) of October 25, 2005 constitutes a clear priority. If the Treaty has been acclaimed at the institutional level, its limited exposure does not appear proportional to its political, economic and legal implications. This contribution aims at providing a clear picture of the process behind the Treaty, its legal substance as well as considering the adequacy of this new initiative. Indeed, the Treaty is built upon the belief that the EU energy acquis can be called upon in order to create a regional energy market in the South East of Europe. Once established, this regional market would then be integrated to the wider European internal energy market. If the process appears appealing and simple on paper, a number of issues surround its pertinence and achievability. Considering the specific case of electricity, this study first underlines some limits of the current European regulatory framework in relation to the achievement of an efficient European electricity market. As a response to these observed shortcomings, the Third Energy Package will then be scrutinized so as to underline possible solutions. The current state of play on European electricity markets having been etched, an assessment of the situation in South East European (hereinafter SEE) countries sheds some light as to the difficulties that currently exist on their electricity markets and restrict the emergence of a South East European regional electricity market. Through the comparison of the European Internal Electricity market and the situation that prevails in SEE countries, this study questions the coherence of the Energy Community enterprise. Through such an analysis, a number of lessons as to the possibility to duplicate the internal energy market to neighbouring and developing countries will hopefully emerge

Five Years Enforcement of the Competition Law in the Republic of Macedonia -, Time for an Assessment

1. Introduction; 1.1. Scope of the Paper; 1.2. The Republic of Macedonia - a Small Concentrated Economy; 1.3. The Relations between the Republic of Macedonia and the EU: from the Stabilization and Association Agreement to the Accession Partnership; 2. Legislative Analysis; 2.1. The 2005 Competition Act: 'Copy and Paste' the EU Competition Law; 2.1.1. Provisions Concerning Anti-Competitive Agreements; 2.1.2. Provisions on Abuse of Dominance; 2.1.3. Provisions on the Control of Economic Concentrations; 2.1.4. Institutional arrangements; 2.2. The Amendments to the Competition Act in 2006 and 2007; 3. Five Years Enforcement of the Macedonian Competition Act; 3.1. Anti-Competitive Agreements; 3.2. Abuse of Dominance; 3.3. Merger Control; 4. Concluding remarks: Improvements throughout the Five Years of Enforcement and Challenges Ahea

Sanctioning excessive energy prices as abuse of dominance : are the EU commission and the national competition authorities on the same frequency?

Following the 2007 Sector Inquiry into the energy sector, the EU Commission has actively enforced Article 102 TFEU to sanction different forms of abuse of dominance by energy operators. Most of the cases have been concluded via commitments decisions which mainly included far-reaching structural (i.e. divestiture of capacity) rather than behavioural remedies. Moreover, in its commitment decisions the EU Commission has mainly targeted exclusionary conducts by energy undertakings, rather than directly sanctioning the excessive pricing in the wholesale and retail markets as exploitative abuses of dominance. Unlike the EU Commission, the National Competition Authorities (NCAs) of the EU Member States have directly sanctioned excessive pricing both at the wholesale and retail level as exploitative abuses of dominance. In particular, a number of NCAs have sanctioned withdrawals of capacity by electricity generators as abuses of dominance, since such conduct caused a direct rise of wholesale electricity prices. Secondly, NCAs of a number of EU Member States have also sanctioned the excessive prices in the retail energy markets imposed by undertakings on final customers. Besides the different focus in the enforcement of Article 102 TFEU in the energy markets in comparison to the EU Commission, the NCAs have mostly opted for imposition of fines on the sanctioned undertakings, rather than imposing structural remedies via commitment decisions. The chapter aims to analyse the enforcement trends of Article 102 TFEU by the NCAs with regard to excessive prices applied by energy operators in the wholesale and retail markets. In particular, the chapter compares such pattern of enforcement with that followed by the EU Commission in this sector during the past few years. The chapter tries to identify the reasons for the different focus of the authorities at national and EU level. It also discusses whether such divergences in the enforcement of Article 102 TFEU are justified in the light of the decentralized enforcement system of EU competition law